Marketing Management – Nike Essay Sample
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Introduction of TOPIC
This report has Nike, INC. as it object of study. How does a company with a few more than 40 years old can be leader in his market by understanding and putting in practice the management strategies and techniques with excellence allied to a perfect relationship with the costumer and a constantly fortification of the brand. Here we are going to analyse the Positioning, branding and marketing approaches of the company. How did two men from Oregon could create one of the most famous brands in the world, responsible for unforgettable ad campaigns, a nonstop revolution and a logo, the “swosh” known and used all over the world. Nike is also the home of a lot of heroes from the most different sports.
In 1971 in Santa Monica, California, Nike was born. The company is consequence of hard work and vision from two men, Bill Bowerman and Phil Knight. Bowerman was the field coach at the University of Oregon and was constantly seeking for ways to give his athletes competitive advantage either with different track superficies, rehydration drinks or especially with running shoes. Phil Knight was talented a middle-distance runner from Portland. They first met when Knight enrolled to be a part of Bowerman’s track team in 1955. Knight believed that shoes manufacturer in Japan could compete with more established brands from Germany. He believed so much that called a Company in Kobe, Japan and convinced them to be a distributor of Tiger running shoes in the United States. When the first shoes arrived Knight sent them to Bowerman to try to make a sale but he got so excited that asked to be his partner in business and to provide his ideas to tiger. They shook hands and that was the beginning of Blue Ribbon Sports. Because their full-time jobs, Bowerman and Knight had to hire their first employee, that was Jeff Johnson. Johnson created the first brochures, ads and marketing material.
The relation between BPS and the Onitsuka, the company that manufactures Tigers, was falling a part and the three decided that was time to stop being a distributor and become a company that designed and manufactured their own shoes. Johnson came up with the name Nike and a Portland’s graphic design student, called Carolyn Davidson, created the famous logo called “Swoosh”. In 1972 the first Nike line of footwear was out. A big part of Nike until now are the endorsed athletes, they help developing new products and also sell them. Nike’s first endorsed athlete was Steve Prefontaine. Prefontaine never lost a race on his home-track, Oregon, in an over one-mile distanced and that gave him exposure along with the brand. Prefontaine died at age of 24 and it s often said that Prefontaine is the “Soul of Nike”. The company had some ups and downs in the 80’s, but in 1985 with a special line of shoes especially designed for rookie of NBA called Michael Jordan the company boosted his way into the number one athletic footwear and apparel. In 1987 the company released their new campaign for the Air Max, a line that revolutionized the industry with visible airbags.
In 1987 was the time of “Just do It”, one of the most famous slogans of all time. In 1990, the company built a new headquarters in Portland and also at the same city, Nike took the relationship with their costumers to the next level by releasing the Niketown. The success of Niketown was so big that the company has a dozen of the spread around the world. In the middle of 1990’s the company that had already footwear lines for soccer and golf decided to real get into those markets. Since then the company expanded their operations to another sports like Tennis, Football and action sports. Nike has always worked with high-performance products and that is one of the reasons of its big fan base. That added to constantly efforts to being closer to the costumer, that are from the most different ages and social classes, total understanding of a market in constant growth, like the creation of lines Casual and Lifestyle, and the perfect endorse strategy, with names like Tiger Woods, Michael Jordan and Ronaldo makes of Nike a giant company with a even greater and valuable brand.
This analyse about the company will start with a PESTEL (political, economic, social, technological, environmental and legal) Analysis of the company. There are some important macro-environment factors that influenced and continue to influence the decisions of CEO, director and managers of big multinational companies like Nike, they are: • Political: The political sphere has a very important participation in the macroenvironment and it is related to working places in third world countries. The politicians of those countries can change the working laws and that would represent a big impact for the company; • Economic: The world had a global crisis in 2008 and that affected all the companies and business but especially companies not related to a survival matter, like food and health. In those moments consumers tend to cut expenses on hobbies or recreation activities;
• Social: The society is investing more on life quality and health so that is a point in favor of the company; • Technological: Nike is a company that it is always alert to the how new technologies can improve their products and vice versa. A good example of that is the line developed by the company called “Nike + ” that helps runners and athletes from all over the world to manage their running activities, including length of the running, speed, route and others details. Nike even has a division called Nike Digital Sports to manage and apply their old activities to the constantly evolution. • Environmental: The company developed a way to produce soccer shirts from plastic bottles. That way of recycling shows how important these topic is for the company. • Legal: Counterfeit products are a big problem in third world and emergent countries. That problem affects the company especially when the local police can’t control it Along the years Nike has expanded and its influence in the market is remarkable.
The costumers of the brand are the most distinguished, man and woman from all ages and tastes. An example of that is the fact the that Nike Golf line attends to a man or woman at age of 60 and the Nike Lifestyle line has shoes and apparel for babies, the last successful endeavor of the company was the Nike SB line, focus on skateboard shoes and clothes. As big company Nike has competitors in many markets, especially with the fact that the company owns other clothes brands like: Converse and Hurley, buy this audit will be focused on the sports market, including Soccer, Football, Basketball, Tennis, Golf and others. Nike has in the German Adidas his bigger competitor, both companies are know for being part of an endless “fight” to the top of the market. Both companies
are constantly trying to new markets, Nike signed a deal to become the official sponsorship of NFL,
Along with Adidas, Nike has other competitors as Puma, Reebok, Umbro and Diadora. The interesting thing about it is the Adidas recently bought Reebok and Nike merged with Umbro. The suppliers are a delicate topic in Nike, not because of the operations or the process, but because of the continuous critics from public opinion in relation to working condition. Nike, as many other companies, concentrates theirs suppliers and assembling lines in poor countries such as China, Taiwan and Malaysia where the number of workers is abundant and the working laws are less restrict. That is a good thing because makes the cost of the products low but it is bad because leaves the company unprotected for any strikes. The constant menace of new entrants and substitute products is constant but the power of the company and the constant investments in R&D lower the possibility of it. It will take some time until a new entrant company to take Nike’s position. On the next page we will see the SWOT analysis of the company in order to understand better.
– The power of the Brand; – Being the 1st company of the segment on the Strengths 100 most valuable global brands of 2012 ; – The quality of the products; – Large mix of products; – Costumer Loyalty; – Investments in R&D. – The constantly appearance of a new sport and so a new niches; Opportunities – New segments; -‐ New markets around the world; – Fortification in sports related to other companies. Threats 1
– The high dependability on the suppliers; – Large mix of Weakness products; -The constantly strikes in countries where the factories are located.
– The growth of Adidas; – Local or national brands around the world; – Global Crisis.
For a big company like Nike, the brand itself is one of the strongest points, added to a large mix of products and the loyalty of the costumer makes it the big multinational that it is. The company has some important opportunities; most of them related to constantly “born” or popularization of new sports, which represents a whole new market for the Nike. Fortification in sports related to other companies, can be exemplified with the NBA sponsorship deal. Nike’s biggest weakness is the supplier relationship and total dependency on them. The large mix of products can be seen as a strengths and a weakness based on how managed that is. The mains threats in Nike’s path are Adidas, local brands and a Global Crisis.
SEGMENTATION, TARGETING AND POSITIONAL ANALYSIS
The market of sports clothes and footwear demands a different kind of segmentation, instead of dividing the costumers by age, gender or social class; Nike does it by different sports. For example if a costumer likes or practices tennis, he or she will be directed to a place on the website especially for tennis players. The same happens with soccer and Football. That strategy represents how much the company knows about their clients and their special needs. The mission statement of the company gives a clue on what target Nike wants to reach: “Our mission is to bring inspiration and innovation to every athlete* in the world. *If you have a body, you are an athlete.” The company has as it main objective making footwear and clothes for every athlete in the world and it doesn’t matter if you are a weekend athlete, semiprofessional or professional. By positioning itself as the most innovative and inspiring company in the market. And willing to have a product or a line for every athlete in the world independent of what sport he practices.
Through all these years Nike has adopted all of the possible growth strategies from line extension, to fighting. In such a big company it is necessary and justifiable in order not to jeopardize the existing products and lines. Like it was said the segmentation of the company is based on demographic factors, in this case different sports or activities. It seems to be working well for them because on the company’s press release of 2012, all categories including running, basketball, Football (soccer), Men’s training, Women’s training, Action sports and Sportswear grew from 6% to 21%2.
As it happens with the brand growth strategies, when it comes to branding strategies, Nike uses more than one. They are, Multiproduct, Multibranding and even two that are not common but are very important in their market: Endorsements and sponsorships. The difference between them is that endorsements are related to athletes and sponsorship to teams or Leagues. Nike has on its list of endorsements athletes like: Cristiano Ronaldo, Maria Sharapova, Le Bron James along with the enshrined Michael Jordan, Ronald and Carl Lewis. Endorsements are very important in the sports segment because the public tends to relate the performance of the athletes to their apparel and then to the company. Endorsement was what took the company to the top in basketball, when in 1985 Nike signed with the unknown Michael Jordan. Sponsorships are also very important for the branding strategy, Nike sponsors teams like the classic Brazilian soccer team along with Portugal, USA, France just to name a few. The company closed an important deal with the National Football League, just to know how big that is, the contract it will be good for five years and the Nike paid, unbelievable, 1.1 billion dollars for the right to sell all licensed products3.
Nike is constantly trying to closer to the consumer and that made the company invest hard on Costumer Relationship Management. • Product: There is a brand new line focused on enhancing the experience between Company and Costumer, that line is the “Nike +”. The user needs to have a smartphone or the Nike Fuelband, and with one of those he or she can check how was the training. There are specifically apps for running, training, and basketball there is also one for measuring how many calories the person burned through the day while using the Fuelband. • Pricing: All those apps are free. The only thing that the costumer need is the Fuelband or a smartphone; • Place: The costumer can also make a profile on the company’s website for analysing the evolution of training, calories burned and routes.
• Promotion: The Company is disseminating the new line on the most varied channels but most on the web. It is been a few time since we saw the last campaign on TV; • People: for purchasing the Nike Fuelband, the costumer either chooses to buy it online or on the website. The training of the people in stores is a differential of the company, all of the workers use the products and are able to answer the costumer questions; • Process: The process of using Nike+ is very satisfying. The app from the phone can be downloaded on the respective stores and in less than a minute the user can already start measuring their runs, games and trainings; • Physical evidence: The physical evidence in this case is the app itself, really easy to use it and “clean”. A perfect way to deliver a new product.
Costumer Relationship Management
Over the last decades companies from all markets realized that the product wouldn’t be enough to have the loyalty of the costumer, that is why they started to adding services to their products and also having creating ways of bringing the costumer closer to the company. A perfect example of that is the Nike + line that we just talked about. With that technology the company can know where their costumers practices their favorite activity, when, how and with that create communities and groups. Another way of getting closer to the costumers is by the sponsorship Of teams and leagues. It is an excellent way of being an extra parte of something that involves so much passion and love as the sports in general. For example, by sponsoring Brazilian’s soccer team, the costumers feel Nike is “investing” in Brazil and that gets the sympathy of Brazilian people. Nowadays with the competition, the costumer is more than ever the most important thing and companies spare no resources to keep him as closes to the brands as they can, after all it is cheaper to maintain a costumer than going after a new one.
The company has opted in the last two years to invest more on the web. In 2010, the company invested more than $771 million dollars on social media, direct marketing, Internet paid search, while only $113 million dollars went to regular media like TV, radio and Printed. The total budget spent on “regular” medias dropped 40% in the last 3 years even while the total budget of the company grown to $2.4 Billion in 2010. Nike is not communicating less, it is even communicating more, but it’s choosing a more modern media channel. On the words of Nike’s CEO Mark Parker, “Connecting used to be here is some a product, here is some advertising, and we hope you enjoy it. But now it is a dialogue”4. That shows a line of thinking of a company that is always ahead of its own time.
Nike is an unbelievable company; it is being on the top for some many reasons due to the courage and leadership of their founders, directors and workers who continue taking their name farther. A company that started with the idea and dedication of two men, it is now one of the biggest empires of our time. Working hard, constantly seeking for innovation and high performance are core competences of the company and helped Nike to arrive on the position that it is now. The company is already a synonymous of sports and it’s stamped in all their projects. A company that is constantly investing on R&D and looking at the future, but never forgetting where they come from; a company that search from million of users but try its best fulfill the expectations of each one of their companies. The best part to end this marketing audit is by referencing, again, their mission: Our mission is to bring inspiration and innovation to every athlete* in the world. *If you have a body, you are an athlete.”
Kerin R. A., Peterson R.A., Strategic Marketing Problems: Cases and
Comments, 11th edition, 1993, New Jersey, United States, Prentice Hall Editing; – http://nikeinc.com/ -http://investors.nikeinc.com/Investors/Financial-Reports-and-Filings/SECFilings/default.aspx -http://nike.q4cdn.com/b3cac0f5-4b59-4dcb-bc61-a8771f3c0a6c.pdf?noexit=true – http://tudosobremarketing.com.br/ps/ – http://nikeplus.nike.com/plus/?show_cc=true -http://exame.abril.com.br/rede-de-blogs/novas-arenas/2012/10/09/nike-x-adidasduelo-de-titas-a-anos-luz-do-brasil/ -http://comunicabola.com/2012/04/29/o-duelo-das-marcas-nike-x-adidas/ -http://management.fortune.cnn.com/2012/02/13/nike-digital-marketing/
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